UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM 10-Q
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(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
-------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number 0-20335
OSB Financial Corp.
-----------------------
(Exact name of registrant as specified in its charter)
Wisconsin 39-1726499
------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
420 S. Koeller Street, Oshkosh, Wisconsin 54901
--------------------------------------------- --------------------
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code: (414) 236-3680
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding twelve (12) months (or for
such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past ninety (90) days.
Yes X No
----- ------
As of July 31, 1996, there were 1,111,484 shares of the Registrant's
Common Stock, $.01 par value per share, issued and outstanding.
2
OSB FINANCIAL CORP
INDEX FORM 10-Q
Part I - Financial Information Page Number
-----------
Consolidated Statements of Financial Condition 3
as of June 30, 1996 and December 31, 1995
Consolidated Statements of Income for the Quarters 4
Ended June 30, 1996 and 1995, and Six Month
Period Ended June 30, 1996 and 1995
Consolidated Statements of Cash Flows for the Quarters 6
Ended June 30, 1996 and 1995, and Six Month
Period Ended June 30, 1996 and 1995
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of Financial 10
Condition and Results of Operations
Part II - Other Information 15
Signatures 16
3
Item 1. Financial Statements
OSB FINANCIAL CORP and SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands) at June 30, at December 31,
1996 1995
------------ ----------------
ASSETS
Cash and Cash Equivalents $ 4,113 $ 3,789
Investment Securities Available
for Sale, at fair market value 22,825 29,763
Mortgage-backed Securities
Available for Sale, at fair
market value 45,277 49,838
Loans Held for Sale 1,038 3,070
Loans Receivable 168,043 165,392
Other Assets 8,707 8,962
--------- ---------
TOTAL ASSETS $250,003 $260,814
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposit Accounts $161,415 $156,782
Borrowed Funds 52,215 64,335
Other Liabilities 4,973 7,064
----------- ---------
Total Liabilities 218,603 228,181
----------- ---------
Stockholders' Equity:
Common Stock (1,529,500 shares
at $.01 par value at 15 15
June 30, 1996; 1,518,000 shares
at December 31, 1995)
Additional Paid-in Capital 17,021 16,883
Retained Earnings, substantially
restricted 24,480 23,909
Unearned Compensation, ESOP (568) (615)
Unearned Compensation, MRP's (684) (689)
Unrealized Loss on Securities
Available for Sale - Net of Tax (430) (37)
----------- ----------
39,834 39,466
Less: 369,866 Shares of Treasury
Common Stock at June 30, 1996;
302,498 at December 31, 1995,
at cost (8,434) (6,833)
------------ ----------
Total Stockholders' Equity 31,400 32,633
------------ ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $250,003 $260,814
============ ==========
See attached notes to Consolidated Financial Statements.
4
OSB FINANCIAL CORP and SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands)
For the Quarter For the Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
-------- -------- -------- --------
Interest Income on Loans
Mortgage Loans $2,705 $2,642 $5,504 $5,105
Other Loans 613 354 1,152 664
-------------------- --------------------
Total Interest Income on Loans 3,318 2,996 6,656 5,769
-------------------- --------------------
Interest and Dividend Income
on Investment Securities
Investment Securities 289 469 642 965
Mortgage-backed Securities 770 818 1,610 1,650
Dividends - FHLB Stock 63 45 108 80
Interest-bearing Deposits 59 8 95 15
-------------------- --------------------
Total Income on Investment Securities 1,181 1,340 2,455 2,710
-------------------- --------------------
Total Interest and Dividend Income 4,499 4,336 9,111 8,479
-------------------- --------------------
Interest Expense:
Deposit Accounts 1,911 1,945 3,791 3,813
Borrowed Funds 731 816 1,663 1,489
-------------------- --------------------
Total Interest Expense 2,642 2,761 5,454 5,302
-------------------- --------------------
Net Interest Income 1,857 1,575 3,657 3,177
Provision for Loan Losses 75 63 215 123
-------------------- --------------------
Net Interest Income after
Provision for Loan Losses 1,782 1,512 3,442 3,054
-------------------- --------------------
Non-interest Operating Income:
Loan Fees and Charges 94 97 185 190
Savings Fees and Charges - net 75 56 151 103
Other Income 39 81 126 161
-------------------- --------------------
Total Non-interest Operating Income 208 234 462 454
-------------------- --------------------
Gains (Losses) on Sales
Gain (Loss) on Sale of Loans 9 128 136 129
Gain (Loss) on Sale of Investments 0 5 14 5
Gain (Loss) on Sale of Other Assets 1 0 (10) 0
-------------------- --------------------
Total Gains on Sales 10 133 140 134
-------------------- --------------------
Net Income Before Taxes and
Non-Interest Expense $2,000 $1,879 $4,044 $3,642
-------------------- --------------------
See attached notes to Consolidated Financial Statements.
5
OSB FINANCIAL CORP and SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands)
For the Quarter For the Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
---------------------- ----------------------
Net Income Before Taxes and
Non-Interest Expense 2,000 $1,879 4,044 $3,642
---------------------- ----------------------
Non-Interest Expense:
Compensation and Benefits 659 613 1,235 1,248
Office Buildings & Equipment 166 195 346 369
Data Processing Expense 92 63 188 153
Federal Insurance Premium 96 92 192 184
Marketing Expense 61 45 113 107
Other Expense 248 281 570 547
---------------------- ----------------------
Total Non-interest Expense 1,322 1,289 2,644 2,608
---------------------- ----------------------
Income Before Income Taxes 678 590 1,400 1,034
Income Taxes 221 226 495 393
---------------------- ----------------------
Net Income 457 $364 905 $641
====================== ======================
Average Common Shares
Outstanding 1,114,628 1,174,935 1,135,228 1,177,060
Earnings Per Share $0.41 $0.31 $0.80 $0.54
====================== ======================
Cash Dividends per Share $0.16 $0.14 $0.30 $0.28
====================== ======================
See attached notes to Consolidated Financial Statements.
<PAGE 6>
OSB FINANCIAL CORP and SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
For the Quarter For the Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
-------- -------- -------- --------
Net cash provided by (used in) operating activities $1,451 ($3,449) ($512) ($2,780)
---------------------- ----------------------
Cash flows from investing activities:
Proceeds from maturities of investment securities 2,000 2,037 3,000 2,537
Proceeds from sale of investment securities 0 0 7,628 0
Purchase of investment securities (4,000) 0 (4,000) 0
Principal repayments on mortgage-backed securities 624 502 1,533 816
Sale of mortgage backed securities 2,708 0 2,708 0
Net (increase) decrease in loans (1,493) (3,835) (2,651) (13,228)
(Purchases) redemptions of FHLB Stock 0 (180) (101) (834)
Capital Expenditures (34) (100) (93) (232)
Capital Expenditures on Real Estate held
for investment 0 (66) (1) (245)
Proceeds from sale of Real Estate held
for investment 268 0 268 0
Proceeds from sale of Foreclosed Properties 78 47 78
---------------------- ----------------------
Net cash provided by (used in) investing activities 73 (1,564) 8,338 (11,108)
---------------------- ----------------------
Cash flows from financing activies
Net increase (decrease) in deposits 2,478 (388) 4,633 (4,030)
Net increase (decrease) in borrowed funds (6,385) 5,020 (12,120) 16,620
Net increase (decrease) in advance payments
by borrowers for taxes and insurance 982 878 1,772 1,862
Proceeds from sale of common stock 0 28 134 46
Dividends paid to stockholders (160) (164) (320) (328)
Purchase of 29,788 shares of Treasury Common
Stock from April - June,1996: 4,120 shares
for same period in 1995 (707) (96) (1,601) (427)
---------------------- ----------------------
Net cash provided by (used in) financing activities (3,792) 5,278 (7,502) 13,743
---------------------- ----------------------
Net increase (decrease) in cash and cash equivalents (2,268) 265 324 (145)
Cash and cash equivalents at beginning 6,381 1,040 3,789 1,450
---------------------- ----------------------
Cash and cash equivalents at end $4,113 $1,305 $4,113 $1,305
====================== ======================
See attached notes to Consolidated Financial Statements.
7
Notes to Consolidated Financial Statements
OSB Financial Corp. and Subsidiaries
1. The accompanying consolidated financial statements include the
accounts of OSB Financial Corp ("Holding Company"); its wholly-
owned subsidiary, Oshkosh Savings Bank ("Bank"); and OSB
Investments, Inc and Oshkosh Financial, Inc. (OFI), both wholly-
owned subsidiaries of the Bank. See note 5 for discussion of
these two subsidiaries. The data as of and for the periods ended
June 30, 1996 and 1995 are unaudited but, in the opinion of
management, reflect all accruals and adjustments necessary for a
fair statement of financial condition and results from operations
at the dates and for the periods indicated. All such accruals
and adjustments are of a normal, recurring nature. The results
of operations for the quarter ended June 30, 1996 are not
necessarily indicative of results to be expected for the entire
year of 1996.
2. On May 15, 1996 the Board of Directors authorized the repurchase
of up to 5% of stock outstanding, or 55,974 shares. As of July
31, 1996, 8,500 shares have been purchased at an average cost of
$23.20 per share.
3. As a member of the Federal Home Loan Bank (FHLB) system, the Bank
may utilize various borrowing alternatives, secured by pledges of
mortgage loans and FHLB stock.
At June 30, 1996, the Bank had $52.2 million in FHLB Advances
outstanding.
The advances have fixed terms ranging from 3 to 48 months.
Interest is payable monthly; principal at maturity. Prepayments
of principal are generally not allowed.
Scheduled maturities of fixed-term advances are:
($ in Millions) Fixed Rate Variable Rate
------------- -------------
$ % $ %
----- ----- ----- -----
1996 $ 5.6 5.66% $ 4.7 5.78%
1997 17.9 5.26 16.9 5.54
1997 3.5 5.96 2.1 5.53
1998 1.2 5.77 -- --
-------------------------------------
Total $28.5 5.45% $23.7 5.59%
=====================================
8
4. Effective January 1, 1996, the Bank adopted SFAS No. 122,
"Accounting for Mortgage Servicing Rights". SFAS No. 122
requires accounting recognition of the rights to service mortgage
loans for others. The total cost of the mortgage loan will be
allocated between the relative fair values of the loan and the
mortgage servicing rights ("MSRs"). The cost allocated to the
MSRs will be recognized as a separate asset and amortized over
the period of estimated servicing income. Activity during the
second quarter of 1996:
Balance 4/1/96 $ 86,690
Additions (included in "Gains
on Sales of Loans" in Consolidated
Statements of Income) 48,806
Less: amortization (deducted from
"Loan Fees and Charges") 2,716
--------
Balance 3/31/96 $132,780
========
Retroactive application of SFAS No. 122 was prohibited, so there
is no effect on prior years. Originated servicing rights
resulting from the above adoption of SFAS No. 122, are amortized
over the estimated lives of the loans using the level yield
method, adjusted for prepayments.
The Savings Bank originates mortgage servicing rights on single-
family residential mortgage loans only. In valuing the mortgage
servicing rights recorded on such loans, the Savings Bank
stratifies the loans by contractual interest rate, and original
term to maturity.
The value of mortgage servicing rights is subject to impairment
as a result of changes in loan prepayment expectations and in
market discount rates used to value the future cash flows
associated with such assets. If actual loan prepayment activity
associated with serviced loans exceeds that which was estimated
by management at the time the mortgage servicing rights were
originally recorded, a valuation adjustment is recorded against
such assets and against the Corporation's loan servicing fee
income in the period of the prepayment.
9
5. On April 1, 1996, the Savings Bank established OSB Investments,
Inc., a Nevada investment subsidiary of the Savings Bank.
Approximately $42 million of mortgage-related securities were
transferred to the subsidiary in exchange for common stock.
The subsidiary is designed primarily for management of a portion
of the Bank's investment portfolio. The subsidiary's employee
and operations are located in Nevada. The Board of Directors
consists of one employee of the subsidiary and two executive
officers of the bank. Results for the quarter ended June 30,
1996:
Interest income from Mortgage backed securities $655
Other Interest income 6
----
$661
Operating expenses 13
----
Pre-tax income $648
Federal income tax 220
----
Net income (included in Net Income on the
Unaudited Consolidated Statements of Income) $428
====
On April 18, 1996, Oshkosh Financial, Inc., (OFI) a wholly owned
subsidiary of the Savings Bank, was re-activated. OFI will be
utilized to offer non-traditional products, such as annuities and
mutual funds, to the customer base. It is anticipated that this
service will be operating in August, 1996.
10
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
General
-------
Management's discussion and analysis of results of operations and
financial condition is intended to assist in understanding the results
of operations and financial condition of the Corporation and the
Savings Bank. The information contained in this section should be
read in conjunction with the Consolidated Financial Statements, and
the accompanying Notes to Consolidated Financial Statements. Loans
receivable and loans originated referred to herein include loans held
for sale, unless otherwise indicated.
Financial Condition
-------------------
Assets declined from $260.8 million at December 31, 1995, to
$250.0 million at June 30, 1996, or 4.15%. The table below shows the
primary factors causing that decrease.
At June 30, 1996 At December 31, 1995 $ Change
-----------------------------------------------------
ASSETS
Investment Securities
Available for Sale, at
fair market value $22,825 $29,763 ($6,938)
Mortgage-backed Securities
Available for Sale,
at fair market value 45,277 49,838 ($4,561)
Other Assets 688
-----------------------------------------------------
($10,811)
=====================================================
LIABILITIES
Deposit Accounts 161,415 156,782 4,633
Borrowed Funds 52,215 64,335 (12,120)
Other Liabilities (2,091)
Stockholders Equity (1,233)
-----------------------------------------------------
$(10,811)
=====================================================
The decrease in Investment Securities available for sale is
primarily due to the sale of $7.6 million of mutual funds during the
first quarter of 1996. Also $3 million of maturing bonds were more
than offset by purchases of bonds totaling $4 million. Finally, since
the securities are classified as available for sale, they must be
shown at fair market value. Increases in market interest rates
<PAGE 11>
resulted in a reduction in fair market value of $309,000, or 1.3% of
the June 30th book value. This re-valuation does not affect the
income statement, but is broken down between unrealized loss on
securities available for sale and deferred taxes on the statement of
financial condition. The deferred taxes are included in the category
other liabilities on the statement of condition.
The $4.6 million decrease in mortgage backed securities available
for sale is primarily a result of a sale of $2.7 million of bonds in
April. Principal repayments on these bonds totaled $1.5 million for
the six month period. Finally, the adjustment to fair market value as
discussed above, equaled $320,000, or 0.70% of June 30th balance.
Deposit accounts increased by $4.6 million, or 3%, to $161.4
million as of June 30, 1996. The Bank began offering a money market
index account, tied to the Donahue/IBC Index, in the fall of 1995.
Balances from this account increased by $5.6 million during the six
months ended June 30, 1996, to a total of $15.6 million. Balances in
other deposit accounts decreased by $1 million during the period.
Balances in borrowed funds decreased by $12.1 million during the
six month period, to an ending balance of $52.2 million, an 18.8%
decrease. The primary source of funds to repay these borrowing were
the sale of investments and mortgage backed securities mentioned
above.
Results of Operations
---------------------
The operating results of the Savings Bank depend primarily on its
net interest income, which is the difference between interest income
on interest-earning assets, primarily loans and securities available
for sale and securities to be held for maturity, and interest expense
on interest-bearing liabilities, primarily deposits and borrowings.
The Bank's net income also is affected by the establishment of
provisions for loan losses and the level of its other income,
including fees on loans sold, deposit service charges, the result of
real estate activities, gains or losses from the sale of assets, as
well as its other expenses and income tax provisions.
Net income for the quarter ended June 30, 1996 equaled $457,000,
a 25.55% increase over the $364,000 for the same period in 1995.
Earnings per share equaled $.41 and $.31 respectively, an increase of
32.26%. The table below shows the primary causes of the increase,
with a discussion following.
12
Quarter Ended Effect on
6/30/96 6/30/96 Net Income
----------------------------------
Interest income on other loans $ 613 $ 354 $ 259
Interest income on investment
securities 289 469 (180)
Total interest expense 2,642 2,761 119
Other changes in net interest income 84
----------------------------------
Net interest income 282
Gains on sales of loans 9 128 (119)
Other changes in non-interest
income and expense (70)
----------------------------------
Change in Net Income $ 457 $ 364 $ 93
==================================
Interest income on other loans was $259,000 greater for the
second quarter of 1996 versus the same period in 1995. This is the
result of the Bank's strategy to increase balances of commercial loans
and consumer loans, which are typically higher yielding than mortgage
loans. The Bank began offering commercial loans in early 1995, and
has built up the portfolio to $11.9 million as of June 30, 1996. An
intense campaign in the first quarter of 1996 to solicit home equity
lines of credit resulted in a dramatic increase in consumer loan
balances. Average balances of commercial and consumer loans equaled
$25.5 million for the quarter ended June 30, 1996, compared to $13.9
million for the same quarter in 1995. June 30 ending balances were
$27.2 million and $15.0 million respectively.
As shown above, interest income on investment securities
decreased by $180,000. This is a result of the sale of mutual funds
and the maturing of U.S. Treasury Notes and other investments which
have already been discussed. Balances in these investments decreased
from $33.3 million at June 30, 1995 to $22.8 million on June 30, 1996.
Total interest expense decreased $119,000, or 4.3%, for the
quarter ended June 30, 1996, compared to the same quarter in 1995.
This was accomplished despite the fact that total deposits and
borrowed funds increased from $209.9 million on June 30, 1995 to
$213.6 million a year later, a 1.8% increase. The primary factor in
the decrease was a decline in weighted average cost of funds from
4.79% as of June 30, 1995, to 4.58% on June 30, 1996.
Gain on sale of loans declined from $128,000 for the second
quarter of 1995 to $9,000 for the same period in 1996. The 1996 gain
is comprised of $48,806 recognition of mortgage servicing rights in
accordance with FAS 122 (see note 4), offset by a net loss of $31,695
on mortgage loans sold in the secondary market and an $8,100 charge
for decline in market value of loans held for sale at June 30. In
1995, with more favorable market conditions, gains on sale of $128,000
were recognized.
13
Net income for the six month period ended June 30, 1996, was
$905,000, or $.80 per share. This compares to $641,000 and $.54 per
share for the same period in 1995, increases of 41.19% and 48.15%
respectively. The table below shows the material changes between the
two period with discussion to follow:
Six Months Ended
Effect on
6/30/96 6/30/95 Net Income
----------------------------------
Interest income on mortgage loans $5,504 $5,105 $ 399
Interst income on other loans 1,152 664 488
Interest income on investment
securities 642 965 (323)
Interest expense on borrowed funds 1,663 1,489 (174)
Other changes in net interest income 90
----------------------------------
Net interest income 480
Provision for loan losses 215 213 (92)
Other changes in non-interest income
and expense (124)
----------------------------------
Change in Net Income $ 905 $ 641 $ 264
==================================
As shown above, interest income on mortgage loans increased by
$399,000, or 7.81%, between the two periods. Most of the increase,
75%, is due to an increase in mortgage loan balances. Mortgage loans
outstanding averaged $145.5 million for the first six months of 1996,
compared to $137.4 million for the same period in 1995. The remaining
25% of the increase is due to an increase in yield on mortgage loans
from 7.42% for the six months ending June 30, 1995, to 7.56% in the
same period in 1996.
The increase of interest income on other loans is due to the
increased volume of commercial and consumer loans, as discussed above.
Average balances on these two categories of loans increased to $23.4
million for the first half of 1996, compared to $11.9 million for the
same period in 1995.
The decrease in interest income on investment securities of
$323,000 was also discussed above. It is caused by the decrease in
investment security balances, due to the sale of mutual funds and
maturities of U.S. Treasury Notes.
Interest expense on borrowed funds increased $174,000 or 11.68%
from $1.5 million for the six months ended June 30, 1995, to $1.7
million for the same period in 1996. This is due to an increase in
average balances outstanding during the respective periods despite the
fact that the June 30, 1996 balance of $52.2 million is lower than the
$55.6 balances at June 30, 1995. Balances increased during the last
half of 1995 to $64.3 million at December 31. Balances in borrowed
14
funds reached a peak of $67.0 million at January 31, 1996, and has
been declining since as the cash flow from the sale of investments and
matured investments has been used to repay borrowings.
Provision for loan losses was $215,000 for the six months ended
June 30, 1996 compared to $123,000 for the same period in 1995, an
increase of 74.80%. This was a result of the increase in loan
portfolio, especially in commercial and consumer loans, and the desire
of management and the Board of Directors to provide adequate
protection for possible loan losses. The loan loss provision equals
$1.0 million at June 30, 1996, compared to $775,000 one year ago. The
loan loss reserve equals 0.60% of total loans currently, compared to
0.49% at June 30, 1995. The reserve currently equals 180.93% of
problem loans and real estate owned. Management believes that the
loan loss reserve is adequate to cover potential future losses.
Capital Ratios
--------------
Federal regulations require the Savings Bank to meet certain
tangible, core, and risk-based capital requirements. Tangible capital
consists of stockholders' equity minus certain intangible assets and
an adjustment for unrealized gains or losses on available for sale
securties. Core capital consists of stockholders' equity and an
adjustment for unrealized gains or losses on available for sale
securities. The risk-based capital requirements address risk related
to both recorded assets and off-balance sheet commitments and
obligations.
The following table summarizes the Savings Bank's capital ratios
and the ratios required by regulations of the Office of Thrift
Supervision at June 30, 1996:
Tangible Core Risk-Based
Capital Capital Capital
-------- ------- ----------
Bank Regulatory Percentage 10.75% 10.75% 24.13%
Required Regulatory Percentage 1.50% 3.00% 8.00%
------- ------ ---------
Excess Regulatory Percentage 9.25% 7.75% 16.13%
($ in Thousands)
Bank Regulatory Capital $27,274 $27,274 $28,229
Required Regulatory Capital 3,805 7,610 9,359
-------- ------- ---------
Excess Regulatory Capital $23,469 $19,664 $18,870
15
OSB Financial Corp. and Subsidiaries
Part II - Other Information
ITEM 1, LEGAL PROCEEDINGS
Neither OSB Financial Corp. nor the Savings Bank is a party to any
material legal proceedings at this time. From time to time the
Savings Bank is involved in various claims and legal actions arising
in the ordinary course of business.
ITEM 2, CHANGES IN SECURITIES
Not applicable.
ITEM 3, DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4, SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5, OTHER INFORMATION
None
ITEM 6, EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27 -- Article 9 Financial Data Schedule for the Second Quarter
16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
OSB Financial Corp.
Date: July 26, 1996 By: /s/ James J. Rothenbach
-------------------- --------------------------------
James J. Rothenbach
President and Chief Executive
Officer
(Duly Authorized Officer)
Date: July 26, 1996 By: /s/ David A. Hayford
-------------------- --------------------------------
David A. Hayford
Vice President - Finance
(Principal Accounting Officer)